Discounting With The Discount Rate



Next video:
Loading the player...

The discount rate is the interest rate you need to earn on a given amount of money today to end up with a given amount of money in the future. The discount rate accounts for the time value of money, which is the idea that a dollar today is worth more than a dollar tomorrow given that the dollar today has the capacity to earn interest.

You May Also Like

Related Articles
  1. Fundamental Analysis

    How do you use a financial calculator to determine present value?

  2. Fundamental Analysis

    What is the formula for calculating net present value (NPV)?

  3. Economics

    Interest Rates: Nominal and Real

  4. Investing Basics

    Understanding Compound Interest

  5. Investing Basics

    Required Rate Of Return

  6. Investing

    Discounted Cash Flow (DCF)

  7. Forex

    Understanding The Time Value Of Money

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!